Start Ups

Introduction: The main reason for anyone to think to start his/her venture is opportunity.
One has to continuously scan the environment to analyse the various factors like political,
economical, social, general competitiveness in marketed. Before starting a new venture.
There are ample opportunities to be tapped. At present, BPO, Biotechnology, ITES are in the
booming stage. And many people have also started their venture and proved successfully. To
be successful to stay in business you need a combination of hard work, skill and
perseverance.

To start a business, the first stage is to find out the opportunities, and there may be many
opportunities. But one need to do a comparative analysis based on the various feasibility
studies like market feasibility, technical feasibility, economical feasibility, etc and also
depends on the personal competencies like knowledge in the area, degree of risk taking
capacity, technical knowledge etc. Of the person. Based on these analyses, entrepreneurs can
identify an area where he/she is competent and the idea is feasible from all aspects to start a
venture.

Business opportunity: Free enterprise is the economic basis for all entrepreneurial activity.
It means that an individual is free to transform an idea into business. The opportunities for
potential entrepreneurs are unlimited. The constantly changing economic environment
provides a continuous flow of potential opportunities if an individual can recognise a
profitable idea. Thousands of alternative exist since every individual creates and develops
ideas with a unique frame of reference.

Meaning of opportunity: the overriding reason for anyone to think of establishing a SSI unit
can be summarised in one word opportunity. The opportunity to be your own boss, to provide
a product or service, to implement your ideas, which can generate sufficient surplus in reason
to think of starting a SSI Unit.

Business opportunity is governed by many factors. They are:

 Congenial business environment.

 Economic viability of the proposition.
 Whether the proposed business will serve and satisfy the target consumers.
 Business information relating to proposed unit to be collected locally and from
experts in the field and analysis the same.
 The extent of competition the proposed business facts.
 Evaluation of the proposition in terms of cost benefit.

All these issues, when examined, will tell us whether there is sufficient opportunity to start a
business which can become a sunrise enterprise without assessing the business opportunity in
a locale, if the business unit is started, it may or may not become a viable unit. Therefore,
entrepreneur with skill and ability to do a particular business, having all knowledge about the
proposed activity and possessing all resources at his command may fail in his new venture if
the business opportunity does not exist in the proposed locale. It will be just like installing a
milk booth in jungle therefore, to start any small business or a SSI business opportunity must
exist in that locale.

Objectives of Identifying of Business opportunities: The following are the main objectives
of identification of business opportunities.

a. To evaluate the possibilities of developing and utilising physical resources of a

particular region from the technical and economic point of view.
b. To study and examine the small, medium and large scale industrial possibilities
keeping in mind the requirement of the region and country as a whole. These
possibilities must be technically feasible and e3conomically viable.
c. To identify those industries which are not based on local resources but they can be
established on the basis of economic consideration keeping in mind the future
requirement of the region or country as such.
d. To recommend by certifying the usefulness of other possible industries for the region.
e. To access and estimate the capital, labour, transport, power, fuel, raw material for
feasible industries.
f. To evaluate the impact of achievement in financial resources, production,
employment and initial requirement of capital in industrial development process.

Steps in setting up a small scale Industry: The main steps involved in the establishment of
a small scale industry are as follows.

1. Selection of project
a. Product or service selection
b. Location selection
c. Project feasibility study
d. Business plan preparation
e. Prepare project profile.
2. Decide on form of owner ship
3. Complete the legal requirements
a. No objection certificate (NOC)
b. Obtain SSI registration
c. Obtain clearance from departments as applicable
4. Arrange for land and building
5. Arrange for plant and machinery
6. Arrange for infrasture
7. Prepare Project Report
8. Apply and Obtain Finance
9. a. Proceed to implement
b. obtain final clearance
1. Selection of project: Project is an idea or plant that is intended to be carried out.
The dictionary meaning of a project is that it is a scheme, design, a proposal of
something intended or devised to be achievement in order to set up a small scale
Industry, a suitable project has to be decided upon. This involves selecting a
product or service, and a location for the unit. Based on these selections, a project
feasibility study has to be conducted and then a brief product profile has to be
prepared for the proposed project.
Project t selection is the initial decision which an entrepreneur has to make.
Project selection and preliminary activities involve the following:
a. Product or service selection
b. Location selection
c. Project feasibility study
d. Business plan preparation
e. Prepare project profile

a. Product or service selection: Entrepreneurs is free to select any product

which he thinks, that product is profitable and viable from market point of
view. The process of selection of product has been considered as an
important decisional area. If the entrepreneur selects and develops a
particular product, he has to consider the dimensions like technological
know-how , financial resources, a rough estimate of demand, customers
satisfaction, position of competitors, interest of dealers, infrastural
facilities, need for efficiency and socio-economic conditions prevailing in
the society etc. And collected information about them.
b. Location selection: one of the major decisions of entrepreneur has to
make is about the location of the project/enterprise where to set up the
unit. Generally, entrepreneurs are free to select any location or site for this
plant development. However, regulatory provisions of the government also
affect the choice of plant location or site. Some of the major aspects to be
considered before deciding on the location of the project/enterprise are
availability of land, proximity of market, availability of raw material,
supply of man power, availability of suitable infrasture facilities, regional
development etc. For many tiny units and service based units, home is
perhaps the best starting point. However, not all types of SSI units can be
set up at home either due to size or the nature of the industry.
c. Project Feasibility study: an entrepreneur is expected to involve himself
in only those projects which are technically sound, financially feasible,
economically beneficial, commercially dependable and organisationally
effective and adequate. To achieve these objectives, he undertakes
feasibility studies:
Feasibility study is defined as “formal investigation of profitable
opportunity which leads to rational decisions about making an Investment
decisions”
Feasibility studies consists of
 1. Market Analysis
2. Technical analysis
3. Financial analysis
4. Economic and special analysis
5. Commercial analysis
6. Ecological analysis (explained briefly below)
d. Business Plan preparation: a business plan is the written document giving
in details all relevant internal and external elements that affect business
and strategies for starting a new venture. In most describe current status,
expected needs, and projected results of new business. Every aspect of the
venture needs to be covered: the project, marketing research and
development, manufacturing, management, critical risks, financing and
milestones or a timetable.
Business planning is an ongoing process in any industry or business or
business enterprise. It is more important for a new business. The
preliminery business plan drown initially goes evolving and refining as the
entrepreneur learns more about market, the product, management team and
the fund requirements of the new venture.
e. Project profile: A project profile give a bird’s eye view of the proposed
project. This may be used for obtaining the provisional registration
certificate ( PBC) from the district industries centre and for making,
applying for industrial areas development board for land or state small
industries development corporation (SSIDC) for shed and other
infrastructures.
Information heads in a project profile is as follows:
1. Introduction
2. Promoter(S) background ( education, experience and son on)
3. Products description
4. Market and marketing
5. Detains of infrastructure needed
6. Process details etc.
2. Decide on form of Ownership: choice of proper form of ownership is a crucial
problem with which an entrepreneur is confronted while launching a new
enterprise. The form of ownership determines the level of ownership, risk,
responsibilities, control and management of business enterprise. Once a form of
ownership is selected it is comparatively difficult and costly to change the form of
organization.
There are four main legal forms of ownership, from which the choice can be
made:
a. Sole proprietorship
b. Partnership
c. Joint stock company &
d. Co-operative society
3. Complete the legal requirements: for establishment and management of new
venture/setting up of a small scale enterprise, entrepreneurs come across a number
of situations to follow laws of the land, right from the conception stage in
promoting the enterprise, entrepreneurs should be careful to obey the legal
formalities, procedures, policies and plans for the government so as to make
themselves free from any sort of legal hassles in future. Important laws and
regulations which are required to fulfil by the entrepreneurs are:
i. No objection certificate (NOC) from local body/panchayat/municipality
ii. Obtain SSI Registration
iii. Provisional Registration Certificate etc.
4. Arrange for land and shed: For any industrial project, a suitable industrial site or a
ready industrial shed is required. The promoters of the unit could consider taking
an industrial site and consturcting a shed as per their requirement. Alternatively,
they could consider taking a ready shed on or on ownership basis.
5. Arrange for Plant and machinery: The plant and machinery required for the
project could be purchased from recognised manufactures/dealers. The plant and
machinery could also be taken on a hire purchase scheme operated by National
Small Industries Corporation (NSIC). This is a Government of India Corporation.
6. Arrange e for Infrastructure: the main infrastructure facilities required for a SSI
unit are land or shed for the project, power connection, water supply and
telephone facility etc.
Single window agencies (SWA’s) are set up at district level for the benefit of
small scale industries. The SWA provides clearances for various infrastructure
and other facilities for tiny and small scale industries
7. Prepare Project Report: For many new project or venture, proper planning is
necessary. A detailed project report provides such a plan for the project. The
project report is useful to the entrepreneur for planning and implementation of the
project. Generally , an entrepreneur is required to prepare a project report before a
project is undertaken. It assesses the demand potential of the proposed product,
works out the cost of capital invested and operational costs and side by side
expected profitability of the proposed project. Practically, it is a pre investment
study of investment proposal, but encompasses a through investigating process
covering economic,tecnical, managerial, social, financial and production aspects.
It is also essential for obtaining finance and other clearances for the project.
8. Arrangement of finance: The funding requirements of a project are of
i. Long term requirements for acquiring fixed assets like land and building ,
plant and machinery and for security deposits
ii. Short term loans for working capital in the form of key loan/cash
credit/bill discounting etc.
9. Implement the project and obtain Final Clearances: The entrepreneurs will have
take necessary steps to physically implement the project after obtaining the
various licenses, clearences, and infrastruture facilities and so on. The following
are the major activities that the entrepreneurs have to undertake for implementing
the project
 i. Construct shed
ii. Order for machinery
iii. Recruit personnel
iv. Arrange for raw materials
v. Marketing
vi. Obtain final clearance etc.

These are some of the major steps or process for setting up small scale industry.

Feasibility Study: An entrepreneur is expected to involve himself in only those projects

which are technically sound, financially feasible, economically beneficial, commercially
dependable and organizationally effective and adequate. To achieve these objectives, he
undertakes feasibility studies.

Feasibility study is defined as “a formal investigation of profitable opportunity which leads to

rational decisions about making an investment decisions”

Feasibility studies consists of

a. Market Analysis
b. Technical Analysis
c. Financial analysis
d. Economic and special analysis
e. Commercial analysis
f. Ecological analysis
a. Market analysis: Any project has no value if the products/services are not sold.
Hence , analysis and appraisal from marketing prospective is made. The analysis
and appraisal consists of
Potential markets, customer segmentation, demand forecasts, marketing strategies,
cost, pricing methods and profitability.
Market analysis is concerned primarily with two questions:
i. What would be the aggregate demand of the proposed product/service in
future?
ii. What would be market share of the project under appraisal?
To answer the above questions, it requires a wide variety of information
and appropriate forecasting methods. The kind of information required is
given below:
a. Consumption trends in past and the present consumption level.
b. Past and present supply position
c. Imports and exports
d. Structure of competition
e. Cost structure
 f. Elasticity of demand
g. Consumer behaviour, intentions, motivations, attitudes, preferences
and requirements
b. Technical analysis: it is an attempt to determine how well the technical
requirements of the industry can be met. Analysis of the technical and engineering
aspects of a project needs to be done continually when a project is formulated.
Technical analysis seeds to determine whether the prerequisites for the successful
commissioning of the project have been considered and reasonably good choices
have been made with respect to location, size, and process so on. The important
questions raised in technical analysis are given below:
1. Have a preliminary tests and studies been done or provided for?
2. Has the availability of raw materials, power and other inputs been established?
3. Is the selected scale of operation is optimal?
4. Is the production process chosen suitable?
5. Is the proposed layout of site, buildings and plant sound?
6. Is the technology proposed to be employed appropriate from the social point
of view?
c. Financial Analysis: financial analysis deals with evaluation of the estimates of
cost of the project to ensure that it contains all provisions for contingencies and
are realistic. Financial analysis seeks to ascertain whether the proposed project
will be financially viable in the sense of being able to meet the burden of servicing
debt and whether the proposed project will satisfy the return expectations of those
who provide the capital. The aspects which have to be looked into while
conducting a financial appraisal are as follows:
1. The capital requirements and its time frame. The breakup of the capital requirement
such as plants, machinery, land and buildings, other fixed assets of the proposed
project.
2. Working capital requirements at various stages of the project and period of operation
3. Means of financing
4. Projected profitability
5. Projected financial position
6. Level of risk
7. Capacity utilization
d. Economic and Social analysis: The economic analysis include the government
policies with regard to particular segment of the Industries. The government
incentives for specific location or tax holidays and the like. The analysis should
include the broad economic aspects like
1. Demand projection
2. Anticipated sales volume and how the project is planning to meet the demands
3. Study of improvements in output, enhanced services
4. Improvement in employment
5. Larger government revenues
6. Increased national income and improved income distribution.
 Economic analysis also concerned with judging a project from the larger, social point
of view. In such an evaluation of the focus is on the social costs and benefits of a
project, which may often be different from its monetary costs and benefits.

e. Commercial analysis: it evaluates the commercial aspects of the arrangements of

the project. It also examines the arrangement process of procurement of
machinery and equipments. The whole evaluation process regarding placement of
orders of equipment, procedure for selection and tendering etc. Arrangement
process for sale of goods and services is also included in this analysis.
f. Ecological analysis: in recent years, environment concerns have assumed a great
deal of significance. Ecological analysis should be done, particularly for major
projects which have significant ecological implications like power plants and
irrigation schemes, and for environment polluting industries like bulk drugs,
chemicals and leather processing.

Preliminary check list: Any entrepreneur desirous of starting a small scale industry should
have a clear picture of the objectives of his project. It is advisable to prepare a comprehensive
check list. Such a list, embracing all the important matters, has been given below for the
guidance of prospective entrepreneurs. It will give an insight into the various processes of a
small scale industry.

The location of an enterprise has to be carefully selected . A wrong choice sometimes proves
fatal for the enterprise. The selection of a suitable locality depends on a number of factors.
Further, each factor is influenced by a number of other factors. So a thorough analysis of the
location to be selected is to be undertaken by Entrepreneur before selects a particular site.
The following check list prepared by the United States department of Commerce will help the
entrepreneur in the appraisal of the basic location factors:

Check list for considering Basis Industrial Location Factor

1. Location of production ( Raw) Materials

a. What production materials exist in the area?
b. In what volume are the production materials available?
c. What is the quality of each production material?
d. How accessible are the available material?
Does the nature of such production materials (Quantity, bulk, perish ability etc) or
any unusual advantage attendant there to definitely favour plant location at or near
site or source?
2. Labour
a. What is the labour force of the area?
b. What is the quality of the available labour force?
c. What is the character of the labour force?
d. What quantity of labour is seasonably available?
I. Is a large supply necessary?
II. Are special skills required?
3. Sites
a. How much land is available for industrial expansion?
b. What are the soil and topographic features?
c. At what cost and terms can land be purchased or leased?
d. What facilities are now or will be available?
e. What industrial floor space is or will be available in existing structures?
4. Industrial fuel
a. What industrial fuel is available for additional industry?
b. How dependable is the supply?
c. At what cost is the fuel available?
1. Is low cost heat a major factor in processing?
2. Is a particular fuel required?
5. Transportation facilities
a. What transport facilities are available?
b. What is the rate situation?
1. Do materials and/or product require prompt and or low cost movement?
2. Does product or raw material require a special type of transportation?
6. Market
a. What is the trading area generally served by this location?
b. What is the general quality of this market?
1. Are times and distance vital matters to reach the market?
2. Is price of quality a vital market factor?
7. Distribution facilities
a. What agencies and services are available?
1. Are there channels for marketing complex and do they require special
financing, inspection, warehousing, storage or terminal facilities?
8. Power
a. What kind of industrial power is available?
b. How dependable is the power supply?
c. At what cost is the power available?
1. Is power a significant factor?
2. Is sufficient surplus power available?
9. Laws and regulations
a. What laws and regulations exist of significance to prospective industries?
1. Is the industry subject to special local and or state regulation?
10. Tax structure
a. How favourable is the tax structure to industry?
1. Is the capital investment of such a size that the tax rate or assessment policy
will be important?